Sell the USD/JPY Exchange Rate: Barclays

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Barclays exchange rate forecast

Barclays have made selling the US dollar / Japanese Yen exchange rate pairing their ‘trade of the week’. In a note to clients the bank says:

We recommend short USDJPY because we believe the FOMC is unlikely to provide much support for the USD, while BoJ inaction this week could result in some yen appreciation pressure again, particularly in light of downside risk arising from the EU Referendum.

We expect USDJPY at end-Q2 at 105 in the Remain scenario, while looking for a sharp decline towards 97 in the “Leave” scenario, as global risk aversion would likely intensify in reaction to the result.

From a technical perspective, we are overall bearish for USDJPY and would prefer to use any short-term upticks as an opportunity to sell at better levels.

The recent key reversal weeks signal selling interest ahead of resistance in the 112.50/113.15 area.

Our longer-term bearish view is intact while price is below the 116.15 former range lows from August 2015. A move below support in the 105.50 area would encourage our bearish view towards our targets in the 100.70 area," Barclays projects.